‘Two pack’: MEPs warned against obstructing new budget rules
By Sarah Collins | Tuesday 12 June 2012
MEPs have been warned against delaying talks with the Council on twin proposals to tighten eurozone budget discipline, as they battle it out to get their amendments through a plenary vote, on 13 June. Political infighting over the draft regulations - COM(2011)821 on eurozone states in excessive deficit and COM(2011)819 on eurozone states “experiencing or threatened with serious difficulties”, known together as the ‘two pack’ - has widened the rift between Parliament’s two largest political groups, the centre-right European People’s Party (EPP) and centre-left Socialists and Democrats (S&D), who are seeking to radically amend the Commission’s original proposal, dating from 23 November 2011.
Economic Affairs Commissioner Olli Rehn warned deputies during a debate, on 12 June, that they risked creating a legal vacuum if they failed to reach agreement on the ‘two pack’ before the ‘fiscal pact’ - the intergovernmental budgetary treaty signed by 25 member states - comes into effect. The ‘two pack’ integrates the central tenet of the ‘fiscal pact’ - a 0.5% of GDP limit on structural deficits - into EU law. “You have a choice either to move forward in a timely way or delay and create a legal gray area,” he warned them in a plenary debate, on 12 June. “What concerns me most is the the political signal that such a scenario would send.”
The member states’ finance ministers agreed a common approach, on 21 February, while the members of in Parliament’s Committee on Economic and Monetary Affairs (ECON) failed to take a final vote on the texts after Socialist MEPs abstained. MEPs are now going to plenary to try to strengthen their hand ahead of three-way negotiations with the Commission and Council, but parliamentary sources say there could yet be a showdown between the EPP and Socialists over individual amendments.
The EPP group is threatening to scrap key amendments to a report by Elisa Ferreira (S&D, Portugal) on excessive deficit countries, including a proposal on creating a €100 billion (or 1% of EU GDP) growth fund and a temporary European redemption fund to part-finance weaker states’ debts, which MEPs say should be a first step to the creation of fully-fledged eurobonds (Amendment 67). Socialists have also introduced several references to public investments to fund growth, employment and social targets under the ‘Europe 2020’ strategy, the EU’s ten-year growth and jobs plan, and want swift agreements on a European financial transaction tax and a common consolidated corporate tax base. EPP deputy Marianne Thyssen (Belgium) said, on 12 June, that any attempt to water down the Stability and Growth Pact - which sets EU debt and deficit limits - should be avoided. “You cannot solve a problem of indebtedness by running up even more debt,” she said, adding that the EPP would not support the proposal for a growth fund. “To call a fund into existence on the same scale of the EU budget without explaining where the resources come from is not possible,” she said.
But Frédéric Daerden (Belgium), the S&D rapporteur for the opinion of the Committee on Employment (EMPL), said the proposals should try to soften “the uniform brutal rules that are being imposed on member states without looking at the root causes of indebtedness”. “Spending on growth and job creation will be sacrificed in the interests of the market,” he said.
ALDE deputies are stuck somewhere in the middle, supporting tight deficit rules but also pushing firmly for the creation of eurobonds and, in the short term, a European redemption fund. The fund, based on a proposal by the German council of economic experts, would see states pooling part of their national debt, which would then be rolled over by the fund, backed by mutual eurozone guarantees. “The European redemption fund is the only realistic and achievable debt mutualisation instrument that we can get in the short run,” said Spanish ALDE deputy Ramon Tremosa i Balcells.
The rift mirrors last year’s vote on the ‘six pack’ of economic governance rules, the precursor to the ‘two pack’, which tightened up punishments for countries breaking the Stability and Growth Pact debt and deficit limits.